December 15, 2018

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Peter Olive, Vortex 6

by Stuart Wilson, Friday 26 October 2018

Peter Olive, CEO at Vortex 6
Peter Olive, CEO at Vortex 6

Peter Olive, CEO at Vortex 6, explores how automation will save the channel partner. With more partners questioning the value of channel programmes, how can this trend be reversed?

Automation will save the channel partner

"New research has emerged that reveals how the traditional partner programme is no longer held with the same regard by the channel partners.

The survey by Canalys shows that the percentage of partners that view channel programmes as important when evaluating IT vendor relationships had dropped from 94% in 2016 to just 77% today. In addition, nine percent of the channel firms questioned rated partner programmes as “not at all important”.

So what are the main reasons for this? Either a lack of consistency or too many changes to the programmes was the top complaint, the survey found. Complexity in achieving certifications and specialisations was also cited as a sore point by resellers, VARs, MSPs and other channel players.

It is a difficult balance for the vendor to strike. The programmes must reflect the enormous changes occurring in the industry; traditional resale margins are being squeezed, and the channel is having to adapt their business models to the cloud and the new consumption-based services clients are demanding.

This can mean adjusting the traditional revenue thresholds that have been used historically to categorise partners to include more of a focus on training and certification, for example as well as a focus on more annuity based sales.

However, compliance to vendors’ partner programmes can already seem like a complicated and fractured process for the channel, with evidence of some partners leaving thousands of pounds – sometime up to 50 percent – in rebates on the table.

This is exacerbated by the shift away from upfront hardware sales to software, cloud and annuity income, which itself is a significant hurdle to a traditional IT supplier. Instead of the customer buying thousands or even millions of pounds worth of hardware upfront, clients are demanding a pay-as-you-go model for their IT consumption.

The benefits of the cloud to the customers are clear – including increased flexibility, scalability and cost efficiency – but the challenge to the partner to transition to a services-led business can be huge as they struggle to restructure their own sales and compensation models.

Plus, rather than rewarding them as they once did for closing a sale, vendors are now increasingly compensating partners on renewal of business and ensuring clients take on all the features associated with a solution.

The shift from a CAPEX to an OPEX business model means a partner’s revenues are spread now over the contract period. It is therefore more important than ever that they have complete visibility – through automation – into their transactions and their engagement with the vendor, to enable informed decision-making.

However, the situation is complicated by the fact that many channel partners are used to managing their compliance to programmes manually, relying on spreadsheets to juggle multiple vendor relationships and requirements. It is no easy task either for an IT vendor to reorganise its entire channel engagement overnight, especially the global legacy firms that over the years have built up layer upon layer of increasingly complex partner management tools.

Canalys says it believes partner programmes will continue to be vital to partners as they are fundamental to how they navigate relationships with vendors.

“The huge challenge is to keep programmes simple while our industry embraces complex new technologies,” it notes, adding that vendor must invest in stronger digital tools, including integrated automation and AI-enabled capabilities, to help reduce partners’ manual administration work.

This is where we have been helping both resellers and vendors by providing both managed services and partner programme compliance tools to the channel to ensure partners achieve the maximum return from their investment in technology.

The recent launch of its Cisco Value Incentive Programme (VIP) Module for its V6 Fusion platform not only automates but optimises the partner compliance process. This means partners can keep up-to-date with their VIP because it provides wider visibility around the Cisco partner programme and identifies any risks to their rebate. At the same time, it reduces manual workload costs by automating data flows and analysis.

Never has the channel been so competitive and had such a tough environment to operate. But as vendors evolve alongside their channel partners, automation such as this will be key to the success of the modern partner programme."

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